UPDATE 2-South Africa's Shoprite agrees to hefty wage rises in Zambia

Tue Oct 29, 2013 11:23am EDT

* Shoprite agrees to wage hike of between 15 and 34 percent

* Wage increase is at least three times the minimum wage

* Shoprite says it is satisfied an agreement has been reached (Adds Shoprite comment)

By Chris Mfula

LUSAKA, Oct 29 (Reuters) - South Africa's Shoprite Holdings has agreed to increase wages for its Zambian workforce by up to 34 percent after Lusaka threatened to shut down its stores over the pay issue.

Shoprite, Africa's biggest retailer, will increase wages for its roughly 3,000 Zambian workers by between 15 and 34 percent, said Robert Munsanje, president of the National Union of Industrial Workers.

"We signed the agreement last week and the lowest paid worker will now get about 1,500 kwacha ($280) and the highest paid will get close to 3,000 per month," Munsanje said.

Shoprite this month fired its Zambian workforce after employees went on strike for higher wages. That prompted labour minister Fackson Shamenda to threaten to revoke the grocer's trading license.

Shamenda has also said Shoprite should pay above the minimum wage because it is a foreign company. Following the wage deal, Shoprite would pay at least three times the mininum wage of 520 kwacha in the southern African country.

"The Shoprite Group is satisfied that a new wage agreement with the union was finally reached in Zambia," spokeswoman Sarita van Wyk said in a statement.

Zambia, Africa's largest copper producer, is a major market for Shoprite and other South African retailers looking to offset weak growth prospects at home.

But the government intervention in the wage talks and the argument that overseas companies should pay higher wages could tarnish Zambia's reputation as an investor-friendly frontier market.

Lusaka attracted more than $3 billion in foreign investment in the first half of this year, above the government target for the whole year, President Michael Sata said last month.

Sata swept to power two years ago, promising to defend workers and reduce poverty in the southern African country. ($1 = 5.3950 Zambian kwachas) (Reporting by Chris Mfula; writing by Tiisetso Motsoeneng; editing by David Dolan and Ed Stoddard)